Teams must make two decisions when preparing their presentations: (1) data and (2) format. Teams must also include a written "Statement," roughly modeled on the FOMC statement that communicates and explains their decision, and gives appropriate guidance about what the Fed may be watching or considering going forward.

Data

There is a wealth of economic data available from a wide variety of sources, and it is easy to get lost in a morass of detail. To keep you on track, the Fed Challenge provides some help and sets some requirements.

Any solid analysis of the current state of the economy will include understanding the trends in certain key indicators. Thus, all teams are required to present data on six data series: civilian unemployment rate, headline inflation (CPI or PCE), core inflation (CPI or PCE), the federal funds rate, total nonfarm payrolls and real gross domestic product.

These indicators are available on the New York Fed website in the How to Guide, under the tab, "Charts for Presentations." (Teams may also obtain the indicators from FRED at the St. Louis Fed, or other sources.) Also included are 14 additional other charts that teams are encouraged to include in their presentations.

Choose the indicators that you think are most relevant to the current economic situation and organize them to tell your story. To use the charts on the New York Fed website, you may simply copy the image and drop it into a Word or PowerPoint file. The chart image may be made larger by tugging on the corner; headlines and other explanatory text may be added to emphasize the points you want to make.

Teams may supplement the indicators provided by the New York Fed with additional data from other sources. It is the teams’ job to figure out which are the most important indicators and how to use them. Different indicators are important to understanding the economy and determining monetary policy at different points in time. Teams should be prepared to defend their choice of unusual data.

Format

Although there is no prescribed format for a Fed Challenge presentation, teams generally present in one of three ways:

Research-style presentationTeam members put together their presentation in a logical way, beginning with an economic overview and ending with a monetary policy recommendation. Then they break the presentation apart, assigning a logical component to each participant and using visuals for the indicators most critical to their recommendation. For example, the first team member could open with a statement summarizing overall conditions, such as "Many economists have described our economy as being in a soft patch," and then follow with the team's forecast for the general economy and a discussion of current debates and FOMC policy options. A second team member might turn to an in-depth examination of current economic conditions and their implications for the near term. A third and fourth member could extend the examination, highlighting another two or three indicators in the process. Charts and other visual devices should be used for data relevant to the team's ultimate recommendation. The summary and the recommendation would then be presented by the team's fifth member. This presenter should probably address two or three policy options before focusing in on the course of action that's most consistent with the team's collective insights, and a suggested wording for the statement.

FOMC role playWith this approach, the five team members play the role of Reserve Bank presidents discussing economic and financial conditions, which often results in participants' putting forth different monetary policy prescriptions. For example, referring to a chart of an economic indicator, one "Bank president" might say, "Given the GDP increases in each one of the last four quarters, I think we should raise interest rates by 25 basis points. A second president might counter: "No, interest rates should stay where they are. Despite the GDP data, this chart reveals that Nonfarm Payroll Employment has recently peaked and that fears that the economy will overheat are no longer relevant." The role play continues, with each recommendation supported by data of particular importance for that issue. Discussions end with a vote, as do real FOMC meetings, and an articulation of whatever consensus is reached in the form of an FOMC statement.

Television news panelThis format has one team member acting as moderator and the other four serving as expert panelists. The moderator refers to the upcoming meeting of the FOMC and may set up the discussion by summarizing economic conditions. The moderator solicits the views of the panel who take turns, each focusing on a different set of variables and interpreting the implications for the forecast and policy, while showing charts or other visual devices that illustrate their points. Panelists can conclude their segments with a recommendation for short-term interest rates and make their own "statements" or have the moderator sum up the group's view in the form of a single statement.